A Landscape Of Lies: the inside story of a blockbuster tax scam

Take a daytime TV star, an ex-soap actor, 10 extras and some potted palms to a quarry in Hertfordshire and what do you get? An award-winning Iraq war blockbuster, of course. Here's how the producers of A Landscape Of Lies (nearly) conned millions out of the taxman

Paul Knight is not the sort of person you'd take for a fall guy. A youthful-looking but physically imposing 45-year-old, Knight makes no secret of his colourful past. "Let's just say my path up until my 30th birthday went in a certain direction," he says. As a youth, his record ran to car theft, shoplifting and breaking and entering; in "the bigger leagues", he was arrested several times but always managed to avoid prison. "I was only convicted for certain things, so I'm not going to admit to what they didn't catch me for." He hints that his godfather was Charlie Kray, and that his family's criminal links go back several generations.

But when he turned 30, Knight decided to go straight. He turned to crime writing, with fictional tales of East End gangland that bordered on autobiography. Then he taught himself film-making, gaining a toehold in the lower ranks of the industry. But nothing in Knight's criminal past prepared him for the shady world of British film, he says. "Now I'm in an industry that seems to have even more crooks in it."

In February 2011, Knight heard that a company named A-Z Consortium was looking for a screenwriter. He met a man involved with the company, who told him A-Z was making a 3D animated movie based on the story of Robin Hood, with a budget of £130m. It wasn't happy with the script, though. Would Knight write a 20-page intro as a trial run? Oh, and while he was at it, would he look at another script they were working on, called A Landscape Of Lives?

Knight went away and wrote 20 pages. A week later, there was another meeting, this time with two producers: Bashar Al Issa and Aoife Madden. They made for unlikely partners. Issa was a slick, chatty, 34-year-old Londoner from a wealthy Iraqi family, with a string of failed property developments behind him. In 2006, he had proposed to build the tallest skyscraper in Buffalo, New York State, but he left, bankrupt, two years later. Subsequent property schemes in Manchester also went bankrupt. By 2009, Issa was facing debts estimated to be £45m. Madden, 32, was a former actor from Northern Ireland. Attractive, ambitious and well connected, she once dated the DJ Chris Evans, and her uncle is Conor Murphy, a Sinn Féin MP once tipped as Gerry Adams's successor. She had performed on stage and television with some success, taking a lead role in the Royal Shakespeare Company's production of The Lieutenant Of Inishmore, among others. But her acting career had fizzled out, and now she was going into film production.

Madden's company, Evolved Pictures, would be making both movies, Knight was told. Issa, as head of A-Z, would handle the business side. They loved Knight's 20-page introduction to the Robin Hood project, but first they needed to finish A Landscape Of Lives. Knight told them he thought their script, written by a graduate screenwriter, was dreadful. "It was a story about a crooked property developer, and there were SAS bodyguards that got killed by a gay brother. It was a crime thriller but it had no real thrills," he says. "I said, 'If you want my honest opinion, I wouldn't try and fix what you've got. I would rewrite it.' "

It was a month before Knight heard from Issa and Madden. In the meantime, he assumed they had moved on and were working with somebody else. But in May 2011, suddenly they were back in touch. Only now, A-Z was defunct and Issa was trading as AB Productions. "They said they really needed to press ahead with A Landscape Of Lives. If I could help them get that done, the Robin Hood project was still on the table, and they'd also fund my next five film projects."

Knight agreed to rewrite A Landscape Of Lives, changing the title to A Landscape Of Lies and creating a new story involving an Iraq war veteran who gets mixed up with London gangsters. The next day, Issa and Madden asked if Knight would also help them get the ball rolling on production of the film. The day after that, Knight was called to another meeting – the third in three days. "This time," Knight says, "Bashar just turns round and says, 'How much to make the damned thing? Do everything for us. We have no idea what we're doing.' " The budget was £100,000, Knight was told. And he had four months to make it.

By this stage, a more experienced film-maker might have become suspicious. What producers of a £130m animation would offer it to a low-budget director they'd just met? And if they had £130m, why were they making a film for just £100,000? Up to now, though, Knight had been making films for far less and paying for them out of his own pocket. His first feature, a crime thriller called Thugs, Mugs And Violence, cost just £10,000 and drew heavily on his past connections. He went out and found some real-life hard men. "'You're gonna play yourselves, guys. Cigars, brandies, 'ave summa that, love it!' " Most of the footage was unusable and the audio was terrible, however, and Knight describes the film as "an expensive lesson in what not to do". In comparison, A Landscape Of Lies represented a big break. "It was someone else's money for a start," says Knight. "A hundred grand was a lot. I thought, Christ, we could make you a blockbuster for this, mate. It was a proper film."

Knight threw himself into the project, even though neither Issa nor Madden seemed to have any idea how to produce a movie. "He was saying, 'We want it in 3D. For the war scenes we want something like The Hurt Locker – slow-motion explosions, those kind of effects. And we want at least one, preferably two, A-listers, like Gerard Butler.' " Madden told Knight they had previously been talking to the agents of Liam Neeson, Brian Cox and Michael Caine. Issa was keen on getting Omar Sharif. "But Omar Sharif wanted £65,000 for three days' shooting," says Knight. "Out of my 100 grand budget!" Realistically, Knight had to look far lower down the pay scale, approaching the likes of EastEnders actor Marc Bannerman and Andrea McLean, presenter of Loose Women. McLean had never acted before, but Knight saw her on TV one afternoon and thought she was perfect for his bisexual therapist character.

Knight's new script centred on Jacob, an Iraq war veteran (played by Andre Samson, who had also appeared in Thugs, Mugs And Violence), as he investigates the murder of his former commanding officer (Bannerman) in a botched mugging. Suspects include a dodgy East End criminal, his female bodyguard, and a workaholic property developer and his wife whose marriage is in trouble – which is where McLean's therapist comes in. She, of course, has secrets of her own.

If Knight had learned anything in his early career, it was how to make a cheap movie look expensive, he says. "You give me 100 grand, I can make it look like a million." He cut product placement deals with sports car and clothing brands. Aston Martin, Ferrari, Lamborghini and Audi all lent him cars for a day. Thomas Sabo supplied the jewellery, Karen Millen provided dresses, Nike gave sportswear. "When you see those brands on the screen, you don't think 'low budget'," says Knight. For one scene, he created the impression of a crowded nightclub with just 10 extras. He lined them along the bar and ran the camera past them. Each time one of the extras went out of shot, they would run round behind the camera and join the line on the other end with a different costume on. "When it's low-budget indie film making, you need to be creative," Knight says. "But for us this felt big. Compared to where we'd come from, this was Hollywood. We were having nothing but laughs."

Aoife Madden, above, and Bashar Al Issa produced reams of falsified receipts to claim film tax relief. Photograph: Rex Features

The only one deflating the mood was Issa, Knight says. Madden was on set most days and seemed genuinely interested in what was going on. She was persuaded to take a small role in the film. Issa's principal task was to bring cash to pay the cast and crew at the end of each day, but he often didn't appear and Knight had to pay everyone out of his own pocket. Issa told Knight he already had footage shot in Jordan that they could use for the Iraq scenes, but it never materialised. Instead, Knight's Iraq was a quarry in Hertfordshire, with potted palm trees and makeshift market stalls. And when Issa did come to the set, Knight often wished he hadn't. "He'd turn up in a sports car and hit on every female we had on set, take a couple to lunch and tell them he'd put them in his next film. Sleazy as hell, like a stereotypical move producer."

Issa and Madden had met in 2009 at the University of East London. Madden's acting career was faltering, and she was studying to become a supply teacher. Issa was studying finance. His lecturer, Tariq Hassan, who became Issa's business associate, introduced the two, knowing that Madden was an actor and Issa was looking to produce movies. At their first meeting at the Dorchester, Issa impressed both Madden and her younger sister, Maeve, a model, whom she'd brought along for support. He spoke about his wealth and connections. He claimed to have met Bill Clinton (which is true) and to be working on a Hollywood movie with Robert Evans, legendary producer of Chinatown and The Godfather (almost certainly false). He offered to help Madden with her film career; while she went to the bathroom, he also obtained Maeve's phone number. Over the next few months, Issa began dating Maeve (they later became engaged) and bringing Aoife along to meetings with business partners. That Christmas, he came to stay with the Madden family in Northern Ireland, where he suddenly suggested that Aoife produce a movie. He would take care of the financial side; she could concentrate on the creative aspects.

Thus, Madden found herself playing the role of movie producer. Despite the fact that she was still a supply teacher, she was cruising around the West End in Issa's Bentley, meeting the agents of high-profile actors. She made contact with Colin Teague, a former Doctor Who director with whom she had worked before; however he, like Brian Cox, Michael Caine and Liam Neeson, declined to work on the film.

The project seemed to have advanced very little when Madden and Issa found Knight, nearly a year later. But he got the film finished before his October deadline, under budget at £84,000, having put £20,000 of his own money into it. Everyone seemed happy with it. The posters were printed, a trailer was cut and a website created. The film played at a few festivals, and won a Silver Ace award at the Las Vegas Film Festival (the award has since been rescinded, and the festival now claims that Knight's film was never actually screened there). In Knight's mind, all that was left to do was sort out the money owed to him, and A Landscape Of Lies would be ready to sell – most likely on a straight-to-DVD basis.

In November, however, two investigators from Her Majesty's Revenue and Customs (HMRC) visited Knight. They asked what he knew about Issa and Madden's tax arrangements. Evolved Pictures, A-Z, AB Productions and associated companies had been under investigation for some time, it emerged. When things had gone quiet earlier that year, it was because Issa, Madden and three other men, including Issa's lecturer, Hassan, had been arrested on suspicion of conspiracy to commit fraud. Knight's movie, and his producers, turned out to have a secret history. The year before he came on to the scene, A Landscape Of Lives had been a £19.6m film starring A-list actors, or so the taxman had been told. Under current rules designed to support the British film industry, any predominantly British film with a budget below £20m is entitled to a cash rebate of up to 25%. On that basis, Issa and Madden had already received £1.2m in VAT and film tax relief, and were preparing to claim another £1.8m when HMRC caught up with them.

Clearly, this £19.6m movie had never existed, but the producers had gone to great lengths to create the impression it did. They produced reams of falsified documents, claiming that Evolved had spent millions on the movie. Their receipts for "travel expenses" alone exceeded the budget of Knight's film. Script development had cost £400,000 (in fact, the original scriptwriter had received £5,000). Expenses records for "talent liability" ran to £2.8m, and listed famous actors whom Evolved had supposedly consulted – including Richard Burton, who died in 1984. There were faked invoices for services from established names including Pinewood Studios, Nina Gold Casting and The Way Recording Studio. When HMRC checked, none of them had heard of Evolved and its film. The movie was supposedly funded by Jordanian investors, an impression Issa had created by moving a small sum of money around several fake companies, all created by him. On several occasions when HMRC phoned these Jordanian investors, the voice at the other end of the line was, in fact, that of Issa, putting on a suspiciously inconsistent "Arab" accent. The only "movie" the team had to show for all this was seven minutes of test footage, of actors reading out a script in Madden's apartment.

"Virtually every document was falsified," says Donald Toon, HMRC's director of criminal investigations. "It became very clear that what we'd got here was a complete fabrication, in terms of the film, purely to enable them to steal." Some of the fakery was well executed, he says. There was even a set of company accounts signed off by accountants Deloitte, presumably on the basis of forged documents (Deloitte declined to comment). But, says Toon, "it was quite easy to test whether they'd done what they said they did. And they simply asked for too much money too quickly."

Madden and Issa evidently decided to cover their tracks by commissioning Knight to make the movie quickly. How they imagined they could pass off a £100,000 film as a £19.6m one is a mystery, but that was clearly the intention. Knight says Issa encouraged him to keep the same character names and locations in his rewritten script "because the film already had certification". There was also much resistance to Knight changing "Lives" to "Lies" in the title, though Issa reasoned that they could pass it off as a typo. When Knight finished his film, Issa gave him a list of names he wanted put on the credits – people who had had nothing to do with the film – in a vain attempt to make the false paperwork tally with the new film. Knight suspected something was up all along, he says. "You didn't sit down with them at a table and think, you're on the up and up, but with my background, some things you're not bothered about. My job is to make films. So any opportunity I get, I'll make the film. If you worried about the backstage politics, you'd never do anything."

At the sentencing in March, the judge described Issa as the "principal beneficiary and architect" of the scheme, who used his "arrogance and disdain to exploit the taxpayer". Madden's involvement is more difficult to fathom. She pleaded guilty on the first day of the trial, whereas Issa protested his innocence – until Knight's testimony blew his defence out of the water.

Paul Knight was given a budget of £100,000 and four months to make a film that would look as if it cost £19m. Photograph: Andy Hall for the Guardian

Knight believes that, like him, Madden was being set up to take the fall. It was Issa who encouraged her to get into movie production, and to set up Evolved Pictures, thereby ensuring Madden's signature was on all the paperwork. And initially at least, Madden was convinced Issa really did have millions of pounds to finance a movie. He even took her and Maeve on a luxurious trip to Egypt in 2010, to meet his "investors". Madden was largely ignored at the meeting, and the discussion was mostly in Arabic, though they did ask her about the tax relief – as well as saying they'd like to see Omar Sharif in the film.

"I honestly believe that she went in wanting to make a film," says Knight. "It's not that she's innocent, but she's more innocent than Bashar. He had cocooned himself quite nicely into her family. Even Aoife's parents were taken in by him. But you have to question, was it all just a ploy?"

Issa and Maeve have now separated. Maeve worked with Aoife at Evolved and on the film; she helped with the product placement and appears as an extra. It has never been suggested that Maeve was involved in the scam, but at some point Aoife crossed the line – when and why is still a mystery. "She always said she was scared of him," says Knight. "She maintained saying yes to him was easier than saying no. Whatever it is, he had a hold over her."

Sarah Clarke is less convinced of Madden's innocence. She was hired by Madden in April 2010, a year before Knight became involved, as production manager on A Landscape Of Lives. At first, she says, Madden came across as "very professional". "I thought she was someone I could really learn from." Madden claimed to be related to Sinéad Cusack, and talked of getting Cusack's husband, Jeremy Irons, to star in the movie. But Clarke soon began to wonder what was really going on. An experienced TV producer, she expected to be dealing with contracts, invoices, budgets and schedules for this supposedly multimillion-pound movie, but Evolved didn't even have an office: Clarke was working part-time from home and meeting Madden in a hotel. "At one stage the budget was £3m," Clarke says. "Next they were talking of building a film studio in Jordan and it had changed to £20m. Then they were building a studio in Britain. Figures were flying around, the script was constantly being rewritten. It was a very confusing situation." Getting a straight answer out of Madden was frustratingly difficult, Clarke says. "She's like a bird. She talks very quickly and she changes her story constantly."

At some point, Madden asked Clarke to look into developing a second project, an animated movie. Clarke was writing a children's story at the time, and Madden encouraged her to adapt it. (This would become the Robin Hood movie Knight was offered.) Clarke was summoned to a meeting in Dublin to present her idea to an agent for a Canadian company with a link to Jordanian financiers. This turned out to be a Turkish man named Tariq. Tariq was an aggressive negotiator. He wanted to purchase all the rights to Clarke's story for £5,000. When she refused, he became angry and aggressive, insulting her and her script. Clarke left the meeting in tears. It was only later she realised that "Tariq" was actually Issa in disguise. She had only met Issa once before, several months earlier at her first job interview. "It sounds ridiculous," she says, "but he looked completely different. The man who interviewed me was quite stocky, he was well-dressed and he spoke with an English accent. The man I met in Dublin seemed a lot smaller and thinner; he was dressed like a golfer, and spoke with a Turkish accent. He did it very well. I didn't think for a moment they were same person."

Clarke was also upset that Madden didn't defend her during this bizarre encounter with "Tariq". "We were quite good friends by that point. I really would have expected her to interject. I got the impression she liked watching me squirm, like she was getting pleasure out of this whole scenario closing in around me. I started to get the impression I was being made the fall guy for the whole thing."

In fact, the net was closing around Issa and Madden. A week later, Clarke reported them to Crimestoppers. HMRC was already investigating them by that stage. "I think they thought it was going to be really easy," says Clarke. "They were so upbeat about everything. To look at Aoife, you'd think she'd just won the lottery, she was so hyper and up about everything. I think she was relying on the fact that they'd never put anyone away for this before. She genuinely believed it was going to come together and she'd get away with it: two million in her back pocket, Bashar out of debt, and me in prison."

Issa is now serving a six-and-a-half-year sentence; Madden got four years and eight months after character references, including one from Knight, helped to reduce her sentence. Three others, Hassan, Ian Sherwood and Osama Al Baghdady, received sentences of three-and-a-half to four years. The £1.2m of public money has not been recovered. It is believed it all went to Issa. "The sentence set on this one is going to send shockwaves through all those other producers who perhaps don't do the £20m end, but who abuse the system by inflating their budgets," says Knight. "I think they're all worried that they're next."

As for Knight, the experience has at least resulted in a publicity campaign to die for. With his erstwhile colleagues now in prison, he now owns the rights to A Landscape Of Lies. He is re-editing it and hopes to release it next year. "I'm not expecting standing ovations, but maybe someone will go, 'That's what you can do for £84,000 in four months? Here's half a million. You've got eight months – show me what you can do.' " Knight is also working with a documentary-maker, and plans to turn the story behind the film into a movie one day. In the meantime, he has cast Danny Dyer in his next film, Palma. Ironically, the saga has opened doors for him. "People know who I am now," he says with a smile.